NG Vysya Bank’s net profit for the second quarter (Q2) ending September 30, 2013 increased significantly by 17.35 per cent to Rs 176.28 crore, compared with Rs 150.21 crore in the same period the previous year.
The bank’s total income is also up 9.91 per cent, at Rs 1,501.96 crore for Q2 this fiscal (Rs 1,366.49 crore same period last year). EPS (basic) stood at Rs 9.47 (Rs 9.96).
Commenting on the results, Shailendra Bhandari Managing Director said “The quarter saw margin pressure, but we continue to be on track to more than match the full year NIM of 3.52 per cent achieved last year.”
There was pressure on NIM during the quarter on account of the policy action in July 2013 which resulted in a sharp increase in funding cost which was not fully transmitted to the borrowers.
Net Interest Margin (NIM) was flat at 3.46 per cent compared to 3.45 per cent in the corresponding quarter of the previous year.
Net Interest Income (NII) for the quarter increased by 19.4 per cent to Rs 440.3 crore from Rs 368.8 crore in the corresponding quarter of the previous year.
Total income increased by 16.2 per cent to Rs 625.0 crore. Operating costs in the quarter increased by 12.5 per cent to Rs 348.7 crore. Operating profit increased by 21.4 per cent to Rs 276.3 crore and cost to income ratio improved to 55.8 per cent from 57.7 per cnet.
Provisions and contingencies increased to Rs 18.1 crore from Rs 6.4 crore in the corresponding quarter of the previous year.
During the quarter one NPA account from the previous quarter was upgraded to standard on implementation of Corporate Debt Restructuring package resulting in release in provision
The bank had parked surplus liquidity in short dated T-bills. However with the change in policy guidelines a cap of 0.5 per cent of net demand and time liabilities was placed for repo borrowings. As a result the bank had to resort to Marginal Standing Facility (MSF) borrowings at a significantly higher cost.
However the adverse impact of this has significantly reduced after the recent lowering of MSF rates / partial run-off of the T-bills portfolio. Other income increased by 9.3 per cent to Rs 184.7 crore from Rs 168.9 crore.